Here’s How to Profit from a Stock Market Crash
Stock Market Crash 2017 Spells Opportunity
This is one of the craziest starts to the year, and our stock market advice for 2017 is to focus on your risk exposure, but also consider ways to profit from a stock market crash.
It is the case that the stock market already went up—tremendously—in anticipation of an economic recovery. Therefore, a major price correction on global economic worries is not unwarranted. The stock market’s been due for a material price correction for a number of quarters, and that’s even if economic data was rosy and earnings were robust.
In the context of a secular bull market, the U.S. economy can experience within it a recession and the stock market can go through major price retrenchments. What’s important is to make sure your portfolio is safely positioned for a slow-growth world and a rising interest rate environment.
Investment-grade dividend-paying stocks are absolutely crucial going forward. It may very well be the case that dividend yield is the only return you get from stocks over the coming quarters.
In any market, there are always good trading opportunities and, with the current price correction that’s taking place, this is a good time to put some brand-name, higher-risk trading opportunities on your radar.
That doesn’t mean now is a great time to be a buyer, but rather it means that the fear following a stock market crash does create opportunity. Watching and waiting are perfectly good strategies.
Having said that, one excellent large-cap, risk-capital stock to watch right now is Alibaba Group Holding Ltd (NYSE:BABA).
Chinese data is directly affecting U.S. market trading action, and a lot of U.S.-listed Chinese equities are trending lower, including Alibaba stock.
The price chart for Alibaba stock is below.
Chart courtesy of www.StockCharts.com
I like Alibaba stock as a potential great turnaround trade for risk-capital investors, not because China’s economic data is so rosy right now, but because Alibaba is the Amazon.com, Inc. (NASDAQ:AMZN) of the greater China region, and this is still a burgeoning economic zone.
BABA stock did what so many new initial public offerings (IPOs) often do; it started out great, but ran out of new buyers and then drifted lower. The low in February 2016 was a good opportunity for new investors. Since then, the BABA stock price has increased significantly, but there’s still a lot of value at this company.
The company reports its next set of financials near the end of October 2016, which is a very important quarter—a catalyst quarter for the position in this correction.
Recent stock market gyrations mean there is a need for more attention on portfolio risk, asset allocation, and quality. But it also highlights opportunity. We’re in a rout that’s going to last for awhile, so seeking good stock market advice and carefully applying it to one’s portfolio is a wise choice at this time.
This is how you profit from a stock market crash in 2017.